New York Governor Andrew Cuomo speaks to the media at a news conference in Manhattan on May 5, 2021 in New York City.
Spencer Platt | AFP | Getty Images
New York Gov. Andrew Cuomo is privately encouraging some of the state’s wealthiest business leaders to remain in the Empire State and lobby lawmakers to remove the federal cap on state and local tax deductions.
Cuomo took the opportunity to discuss those topics with a small group of executives which included financiers from Wall Street during a call on Thursday, according to a person with direct knowledge of the matter.
This person declined to be named in order to speak freely about a conversation deemed private.
“As business leaders, we should be telling people to stay in New York and to try to get SALT in the new tax bill,” the person with knowledge of the call said in describing the message from Cuomo to participants.
The Biden administration is pushing to roll back parts of former President Donald Trump’s 2017 tax reform law in order to fund infrastructure, and some Democrats are calling on the White House to remove the $10,000 cap Trump imposed on SALT deductions.
A Cuomo press representative did not return repeated requests for comment.
In the state budget passed by lawmakers in Albany and recently signed by Cuomo, New York City’s wealthiest executives would likely see combined local and state personal income tax rates higher than those on wealthy California residents.
Within the more than $200 billion state budget, the top tax rate gets bumped to 9.65% from 8.82% for single filers who make more than $1 million. Those who make between $5 million and $25 million would be taxed at around 10.3% and for those making more than $25 million the rate would be at 10.9%. Wealthy earners are expected to get hit with those new taxes in the next tax season, with the rates expiring in 2027.
Wealthy New Yorkers have previously signaled to CNBC they may leave New York altogether and head to Florida with taxes on the verge of hitting historic levels for the rich in the Big Apple.
Cuomo’s engagement with these executives comes as he has been under siege for alleged sexual harassment and his administration’s handling of nursing home death data during the Covid pandemic. Cuomo has denied the accusations of sexual harassment.
Cuomo has also previously said he wants to run for a historic fourth term in 2022 and keeping big businesses, along with their leaders, from potentially leaving New York could help him get reelected. A recent Siena College Research Institute poll showed that 33% of participants would vote to reelect Cuomo next year if he runs, compared to 57% who would prefer “someone else.”
Cuomo has previously called for removing the SALT cap.
“Repealing SALT would lower the effective tax rate on the state’s top earners by 37%,” Cuomo said in April. “The state’s new, top 10.9% tax rate becomes an effective 6.9% tax rate,” he explained. Cuomo was part of a group of governors that sent a letter to President Joe Biden calling for the repeal of the SALT cap.
Taxpayers, particularly wealthy people in New York and other high-tax states including New Jersey and California, saw the biggest benefits when there was no SALT cap. SALT deductions account for taxes at the state and local levels, including property and income tax.
Executives in New York, including leaders of the Partnership for New York City, have pushed Senate Majority Leader Chuck Schumer, D-N.Y., and Biden’s team to bring back the full deduction.
Reps. Tom Suozzi, D-N.Y. and Josh Gottheimer, D-N.J., are among some of the Democratic lawmakers who say they will oppose any changes to the tax code unless SALT is brought back.
President Joe Biden is looking to raise taxes to pay for his $2 trillion infrastructure proposal. Biden has said he is open to raising the corporate tax rate to between 25% and 28% as a way to pay for his infrastructure plan, and has vowed not to raise taxes on those making less than $400,000.
White House Press Secretary Jen Psaki said in April that the SALT deduction “would not be a revenue raiser” and it’s unclear if the administration plans to include repealing the cap as part of their infrastructure plan.